N.Y. Financial Services Law § 801: Definitions

§ 801. Definitions. For the purposes of this article:

(a) "Factoring transaction" means an accounts receivable purchase

transaction that includes an agreement to purchase, transfer, or sell a

legally enforceable claim for payment held by a recipient for goods the

recipient has supplied or services the recipient has rendered that have

been ordered but for which payment has not yet been made.

(b) "Commercial financing" means open-end financing, closed-end

financing, sales-based financing, factoring transaction, or other form

of financing, the proceeds of which the recipient does not intend to use

primarily for personal, family or household purposes. For purposes of

determining whether a financing is a commercial financing, the provider

may rely on any statement of intended purposes by the recipient. The

statement may be a separate statement signed by the recipient; may be

contained in the financing application, financing agreement, or other

document signed or consented to by the recipient; or may be provided

orally by the recipient so long as it is documented in the recipient's

application file by the provider. Electronic signatures and consents are

valid for purposes of the foregoing sentence. The provider shall not be

required to ascertain that the proceeds of a commercial financing are

used in accordance with the recipient's statement of intended purposes.

(c) "Open-end financing" means an agreement for one or more extensions

of open-end credit, secured or unsecured, the proceeds of which the

recipient does not intend to use primarily for personal, family or

household purposes. "Open-end financing" includes credit extended by a

provider under a plan in which: (i) the provider reasonably contemplates

repeated transactions; (ii) the provider may impose a finance charge

from time to time on an outstanding unpaid balance; and (iii) the amount

of credit that may be extended to the recipient during the term of the

plan (up to any limit set by the provider) is generally made available

to the extent that any outstanding balance is repaid.

(d) "Closed-end financing" means a closed-end extension of credit,

secured or unsecured, including equipment financing that does not meet

the definition of a lease under section 2-A-103 of the uniform

commercial code, the proceeds of which the recipient does not intend to

use primarily for personal, family or household purposes. "Closed-end

financing" includes financing with an established principal amount and

duration.

(e) "Finance charge" means the cost of financing as a dollar amount.

It includes any charge payable directly or indirectly by the recipient

and imposed directly or indirectly by the provider as an incident to or

a condition of the extension of financing. It includes all charges that

would be included under 12 C.F.R. part 1026.4 as if the transaction were

subject to 12 C.F.R. part 1026.4. In addition, the finance charge shall

include any charges as determined by the superintendent. For the

purposes of an open-end financing, the finance charge shall assume the

maximum amount of credit available to the recipient, in each case, is

drawn and held for the duration of the term or draw period. For the

purposes of a factoring transaction, the finance charge includes the

discount taken on the face value of the accounts receivable.

(f) "Financial institution" means any of the following: (i) a bank,

trust company, or industrial loan company doing business under the

authority of, or in accordance with, a license, certificate or charter

issued by the United States, this state or any other state, district,

territory, or commonwealth of the United States that is authorized to

transact business in this state; (ii) a federally chartered savings and

loan association, federal savings bank or federal credit union that is

authorized to transact business in this state; or (iii) a savings and

loan association, savings bank or credit union organized under the laws

of this or any other state that is authorized to transact business in

this state.

(g) "Person" means an individual, corporation, partnership, limited

liability company, joint venture, association, joint stock company,

trust or unincorporated organization including, but not limited to, a

sole proprietorship.

(h) "Provider" means a person who extends a specific offer of

commercial financing to a recipient. Unless otherwise exempt, "provider"

also includes a person who solicits and presents specific offers of

commercial financing on behalf of a third party. For the avoidance of

doubt, the extension of a specific offer or provision of disclosures for

a commercial financing, in and of itself, shall not be construed to mean

that a provider is originating, making, funding or providing commercial

financing.

(i) "Recipient" means a person who applies for commercial financing

and is made a specific offer of commercial financing by a provider. A

recipient may also be an authorized representative of such person. A

person acting as a broker cannot be a recipient.

(j) "Sales-based financing" means a transaction that is repaid by the

recipient to the provider, over time, as a percentage of sales or

revenue, in which the payment amount may increase or decrease according

to the volume of sales made or revenue received by the recipient.

Sales-based financing also includes a true-up mechanism where the

financing is repaid as a fixed payment but provides for a reconciliation

process that adjusts the payment to an amount that is a percentage of

sales or revenue.

(k) "Specific offer" means the specific terms of commercial financing,

including price or amount, that is quoted to a recipient, based on

information obtained from, or about the recipient, which, if accepted by

a recipient, shall be binding on the provider, as applicable, subject to

any specific requirements stated in such terms.